Stan's Market recorded the following events involving a recent purchase of merchandise:
Received goods for $20,000, terms 2/10, n/30.
Returned $400 of the shipment for credit.
Paid $100 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's merchandise inventory
A) increased by $19,208.
B) increased by $19,700.
C) increased by $19,306.
D) increased by $19,308.

Question

Quizplus · Accepted Answer

The company paid the invoice within the discount period, so they get to take the 2% discount. The discount is $20,000 * 0.02 = $400. So the company paid $20,000 - $400 = $19,600 for the merchandise. They also paid $100 for freight, so the total cost of the merchandise is $19,600 + $100 = $19,700. However, they returned $400 of the merchandise, so the final cost of the merchandise is $19,700 - $400 = $19,300.

Stan's Market Recorded the Following Events Involving a Recent Purchase